Sports coaches know that there is nothing more dangerous for a team than retreating into passivity for fear of making a mistake.Whether it is due to a desire to sit on a lead, or because of nerves following a setback, failing to advance aggressively is almost always a strategic error.What is true in athletic competition is all too true in the life of nations. While imprudence is always unwise, excessive caution in the name of prudence or expediency can have grave consequences. A nation will never have more power or influence than it has ambition to shape the global system. A sense of fatalism can become a self-fulfilling prophecy as adversaries are emboldened and alliesmove either to appease adversaries or to provide for their own security.

At a time of high tension in Europe withRussian adventurism in Ukraine, pervasive conflict and instability in the Middle East, and rising tensions within Asia as China makes its presence ever more strongly and widely felt, the choices the US makes will have far reaching consequences. It is no exaggeration to say that there is more doubt about our willingness to stand behind our allies, resist aggression and support a stable global system than at any time in decades.

Effective engagement at flash points is essential but crisis response is never as good as crisis prevention.Somewhat lost as the world focuses on global hotspots is the danger that the US will abdicate from the responsibility it has undertaken for 70 yearssince the second world war for supporting a more integrated, increasingly rule based and faster growing global economy. It is the success of this project that explains why historyplayed out so differently after the second world war than after the first, and it is this project that won the cold war by demonstrating that capitalism rather than communism was the best way forward for the world’s people.

At a time when authoritarian mercantilism has emerged as the principal alternative to democratic capitalism, the US Congress is flirting with eliminating the Export Import Bank that, at no cost to the government, enables US exporters to compete on a more level playingfield with those of competitor nations, all of whom have similar vehicles.Only by maintaining a capacity to counterforeign subsidies can we hope to maintain a level global trading system and to avoid ceding ground to mercantilists. Eliminating the Export Import Bank without extracting any concessions from foreign governments would be the economic equivalent of unilateral disarmament.

No one with any sophistication supposes that the world has seen the last big financial crisis or that we can prosper in a world in crisis. Yet the US, having pushed successfully for big increases in IMF resources and for important reforms in its governance, is now the lone nation blocking these measures from going into effect as Congress is unwilling to pass the relevant authorising legislation.The IMF enables us to do in the economic areawhat we are unable to do in the security area: place most of the burden for supporting a functioning global system on all global stakeholders. The vital strategic thrust proclaimed in US foreign policy over the pastfive years has been the pivot or rebalance towards Asia. This is entirely appropriate given the shift in the global economic centre of gravity. The reality though is that little has changed. The most important potential beneficial change in the next several years would be the achievement of the Trans-Pacific Partnership. Yet the combined prospect that a deal will be negotiated and that it will receive Congressional approvalseems much too low for comfort and there is little evidence that the issue commands urgency beyond the relatively narrow international trade community. The prospects for a trade agreement with Europe seem even more remote.Then there is the economic assistance dimension. When Latin America faced a profound debt crisis in the 1980s, when the Berlin Wall fell and the nations of central Europe and the former Soviet Union needed to transform their economies, when financial crisis struck Asia in 1997, when debt burdens stunted Africa’s growth around the turn of the century, the US working with its allies and the international financial institutions crafted strong if imperfect responses to restore growth and hope. No comparably large and generous effort is visible today with respect to the Middle East or Ukraine, even as China is emerging as a larger presence in much of Africa and Latin America than the US. A failure to engage effectively with global economic issues is a failure to mount a strong forward defence of American interests. The fact that we cannot do everything must not become a reason not to do anything. While elections may turn on domestic preoccupations, history’s judgment will turn on what the US does internationally. Passivity’s moment has past.The writer is Charles W Eliot university professor at Harvard and a former US Treasury secretary

As a Californian, I am pained to say that three of the nation's five fastest-growing cities—and seven of the top15—are in Texas, according to the U.S. Census Bureau.Much of this growth is spurred by the state's booming energy industry. Innovations such as hydraulic fracturing, "fracking," and horizontal drilling are making the state's gas and oil fields more productive than ever, attracting newcomers with high-paying jobs.

But the energy boom is only part of the story. In April, Toyota announced it is moving its U.S. headquarters from California to Texas. Lower energy costs were a factor, but so too were the Lone Star State's lower taxes and far fewer regulatory burdens. If states are truly laboratories of democracy, Texas' pro-growth policies serve as an example of the way forward in a slow recovery for my home state of California and the country as a whole.

Bloomberg News

Texas has no state income tax, while California's top 13.3%marginal rate is the highest in the country. Electricity prices are about50%-88%higher in California compared with Texas due to the Golden State's renewable-energy mandate, and its gas is 70-80 cents per gallon more expensive because of taxes and blending requirements. A recent California State University study found the total loss of gross state output for California each year due to regulatory costs was $492 billion, equivalent to the loss of 3.8 million jobs each year.

Similar to California's high income tax, the U.S. corporate tax rate of 35% (plus another 4.1% average state rate) is the highest among developed nations. These high taxes discourage growth and investment, which means fewer U.S. jobs. Worse, small-business owners who form S-Corps and partnerships often end up paying more than the corporate rate. This further hurts job creation.

To emulate Texas, our policy makers in Washington need to lower corporate and individual tax rates to encourage investment and make the U.S. more competitive with the rest of the world.

Like California, the U.S. is a regulatory nightmare. Today there are 3,305 federal regulations in the pipeline, and the 2013 Federal Register contained80,000pages of new rules, regulations and notices. A recent report by George Washington University's RegulatoryStudies Center found that the cost of regulatory rules in 2012 under President Obama exceeded the cost of all rules in "the entire first terms of Presidents Bush and Clinton, combined."

Congress needs to institute a cost-benefit analysis of each new regulation before it is enacted, as well as review existing regulations, to determine their value. Federal agencies should berequired to seek Congress's approval before putting major regulations into effect. Finally, all regulations should have expiration dates to prevent out-of-date rules from remaining in force.

State policies also affect income inequality.It turns out higher state income taxes and overregulation—as at the federal level—lead to less growth and fewer high-paying jobs. A recent report by Afscme, the nation's largest public-employees' union, found that California has the third-highest income inequalitygap in the nation. Take into account the state's high cost of living, and the burden on middle-class and low-income families is even greater.

Los Angeles's current economic woes epitomize the problem. According to the Los Angeles 2020 Commission, a private commission established in 2013 to study and report on "fiscal stability and job growth" in the city, Los Angeles added one millionnew residents between 1980 and 2010, but it lost165,000jobs. At 17.6%, L.A.'s poverty rate is higher than any other major U.S. city. Proportionately, there are 42% more poor people in California than in Texas.

These economic findings are not unique to California and Texas. Like Texas, the "pro-growth states" of Wisconsin, Indiana, Michigan (outside Detroit) and Ohio are flourishing, whereas Illinois has an explosive state debt, significantly higher unemployment, and the slowest personal income growth in the Great Lakes region.

There are other impediments to job creation that don't have state parallels, perhaps the biggest being ObamaCare. These must also be addressed. But the facts seem plain with respect to taxes, regulations and energy costs. Washington should follow Texas' lead and pass pro-growth reforms. It's not big versus small government. It's government that worksfor us not against us.

Dr. Allen, a pediatric heart surgeon, is a former professor and surgical director of the Children's Heart Institute in Houston. He is currently running for Congress in California's 24th District.

CAMBRIDGE – To Europeans with whom I speak, the $8.9 billionfineimposed on the French financial-services company BNP Paribas for violating American sanctions against Cuba, Iran, and Sudan seems excessive.Yes, BNP did something seriously wrong. But $8.9 billion? Isn’t that extremely disproportionate for an otherwise highly responsible bank? French President François Hollande asked US President Barack Obama to intervene to have the fine reduced, as did the European Union’s commissioner for the internal market and services, Michel Barnier.

The fine is indeed much higher than those levied before.Hefty fines for currency-trading violations are not new (HSBC, for example, was hit with a $1.9 billion fine in 2012); but a fine close to $10 billionis.

Three factors, not all of which are being discussed, seem to explain the size of the penalty. First, BNP’s infraction was part of a pattern of deliberate and repeated behavior. Second, the settlement came at a time when the American authorities faced heavy criticism for being soft on big banks during and after the 2008 financial crisis. Finally, and more speculatively, the United States’ effort to make finance a more efficacious foreign-policytool could have affected its treatment of BNP.

On the first issue, European businesspeople and media organizations need to appreciate fully how US prosecutors of financial crimes think. Once an investigation shows clearly that wrongdoing has occurred, the authorities expect the target to come clean, cooperate, and restructure the firm to ensure that the infractions do not recur. But BNP continued the banned transactions and knowingly sought to cover its tracks. The transfer documentation reportedly was regularly stripped of key details such as the destination of wire transfers, so that the transaction would be harder to investigate and less likely to provide evidence of malfeasance.

In American corporate criminal actions, the targeted US firm often brings in a prominent figure – a former prosecutor or a former judge – to investigate the behavior and people involved and report to the target’s board of directors. Thelatest example of this practice now in the news is that of General Motors, which hired Anton Valukas, a prominent former prosecutor who examined and reported on the dealings of the failed investment bank Lehman Brothers to the bankruptcy court. Valukas’s task for GM was to investigate and report on the company’s faulty ignition switches, which have been linked to 13deaths.

The targeted firm then typically fires the most egregious wrongdoers and puts management-control systems in place to reduce the chance that similar problems will arise in the future.Perhaps the investigation interprets ambiguity in a way most favorable to the organization and its seniormanagement, but it is understood that the investigation will indeed uncover the core facts and lead to effective reforms.

Some might view this way of proceeding as moralism, though some of it results from under-staffed, under-funded prosecutorseconomizing on resources.The target pays for its own investigation. BNP did not seem to do any of this with gusto; its investigation did not match the effort made, for example, by GM. It did not prevent subsequent violations by implementing effective controls to detect problems.

The second factor is that BNP’s case came to a head at a time when US prosecutors were being accused of treating banks as “too big to jail,” for fear that pressing charges against them would weaken them too much and thus undermine the real economy. BNP just happened to be one of the next banks in line for prosecution and thus found itself in the crosshairs.

BNP did lobby European authorities to make a too-big-to-jail plea to the US authorities.The European authorities made the plea, claiming that the large fine would cripple BNP; it did not work.

Finally, bear in mind that the case coincided with the crises in Ukraine and elsewhere, with the major US enforcement action being financial and economic sanctions on Russia, the largest of which are still being threatened. Recall BNP’s transgressions: the US barred financial transactions with Sudan, Iran, and Cuba through banks that touched US soil (or the US dollar) in their dealings.

Most banks complied.BNP did not, engineering secret transactionsinvolving all threecountries.

At a time when the US is reluctant or unable to project military might to back up its foreign-policy goals, it is seeking to use financial might as a surrogate. The effort might induce a financial backlash in the future, but BNP’s problems emerged when effective sanctions were at the forefront of policymakers’ minds – and, one suspects, not absent from prosecutors’ minds.

If the US is to make its financial weaponry an effective foreign-policy tool, big banks cannot blithely proceed to do what US authorities have prohibited.It would take only a few noncompliant banks to render financial sanctions ineffective. And it is difficult to detect which banks are not complying and to what extent.

So when one miscreant is discovered, the enforcement authorities hit it hard, to signal to others that, while they might not get caught, the financial penalties will far exceed the limited benefits of disobeying the government’s foreign-policy edicts.This general move for criminal enforcement – greater penalties to account for the difficulties of detection – is a standard prosecutorial move in the US and around the world.

Thus, European critics of the fine imposed on BNP Paribas are right to emphasize its disproportionatenature.What they overlook is that this was precisely the point.

Mark Roe, a professor at Harvard Law School, is an expert on securities law and financial markets. He is the author of numerous studies of the impact of politics on corporate organization and corporate governance around the world.

Summary

Not all consolidations are the same.

Commercial traders have gone hugely bearish.

Upcoming week's expectations.

Not everything is as it outwardly seems in the metals world at this time. In fact, I think all camps may be in for a bit of whipsaw over the next month or so.More and more technicians are viewing the current consolidation in GLD as a bullish sign.They expect continuation of the trend off the 119 lows. Many of the fundamentalists have been pointing to demand numbers from China and India, and a whole host of other factors that are supposed to push gold higher. And, maybe they will finally have their day.Then there are those who watch the Commitment of Traders report intently, attempting to glean clues as to where the markets are supposed to go.Last week, we were provided with one of the most bearish reports we have seen in quite some time. The commercial traders went heavily short, and many view this as an indication to an imminent big decline.This report is also what most point towards who feel that the metals are manipulated. Their claim is that when the commercial traders - the supposed manipulators of this market - go heavily short, the market follows the path they set. Well, this past week, they are faced with a bit of a conundrum. In fact, someone questioned why the market has not dropped this past week when the commercial traders went so heavily bearish. Don't they control the markets? If they went heavily short, why did the market not drophard and fast?The issue that most do not understand, about which I am attempting to continually enlighten, is that sentiment controls the market.No matter how many short positions are placed by the supposed "manipulators," the market will not drop until sentiment is sufficiently ripe for that drop to occur. Sentiment is the primary controller of this market, despite the myriad of news events and short trades pointed towards over the last3 years.In fact, quite some time ago I pointed out that the exact same Fed statement supposedly caused movements in silver of greater than10% in exactly opposite directions.Furthermore, a little over a year ago, the commercial traders were caught on the wrong side of a market move in a very bad way. Even recently, someone pointed out how the commercial traders were caught on the wrong side of the market during the last bull-market run. So, again, unless you understand the primary direction for sentiment, none of these factors will matter.And, this past week's COT report is even more bearish than the last. Commercial traders have become even more bearish than before, and the hedge funds have become even more bullish.So, it looks like the battle lines have been drawn. It is the technicians, fundamentalists and hedge funds against the commercial traders. And, I really believe the commercial tradershave the edge here.When one looks more closely at the technical perspective, you have to realize that not all seeming consolidations are continuation patterns.In Elliott Wave parlance, we view truncated patterns as topping pattern which can also look like bigger consolidations, which then break to the downside. And, this can very well be one of those patterns. A break down below the 125.70 level confirms to me that we have a truncated topin place. This would then align the technicians with the commercial traders. Furthermore, nothing even precludes this market to another higher high before we break downbelow that125.70 support level, so I will be maintaining an open mind in the upcoming week.Ultimately, I think the fundamentalists will be standing alone at this dance expecting much higher levels, assuming125.70 breaks as support. Well, there is really nothing new there. These fundamentalists have been pointing to the same factors for three years, claiming that the gold bull market is about to return, only to see further and further lows. So, this camp really does not carrywith it much ability to prognosticate the immediate direction of metals and should likely be discounted at this time.Now, if I were to draw out a playbook as to how to get the most market participants confused as to the real market direction, I would be looking for a "scary" drop in the GLD towards the 121-123region (even if we get another push higher before125.70 is broken).This would make the COT followers believe that the "big one" is upon us, and we are on our way to the 1000region or lower. However, as the retail shorts begin to pile in, the market then maintains support in the 121-123region, and begins a very strong rally towards the 129-130.50 region. This would serve to reassure all those that have become newly inaugurated bulls that the lows have indeed been seen, and we have truly moved backinto the long term bull market.What this would do would be to take out the weak hands on the long side with a break down below the current consolidation, bring in more retail short side traders on the drop to 121/123, whipsaw the short side traders with one more strong rally, and then bringin more retail long side traders. Ultimately, this scenario would hurt the most traders within this region, only to then skewer these newly inaugurated bulls, as the market then drops to take out the 119 region, on our way to the 100 or potentially even lower.Now, I know this sounds like quite the fantasy to some of you, but I see a very real pattern potential on the charts I am looking at to see this play out. But, again, I must caution you as I have in the past. We are, in my humble opinion, still within a counter-trend, corrective rally. These can take many different twists and turns, as they have no set pattern within these corrective structures. These are the most variable of all Elliott Wave structures that we use to follow market sentiment.Therefore, we almost have to be ready for the unexpected, and be exceptionally nimble as we attempt to determine from where the market will set up for the final break down and final flush out of all bullishness from this market. And, yes, I still believe that this final flush is needed in order to set up the next major multi-year bull run, in a similar manner as the phoenix rising out of the ashes in a spectacular burst. (And it does not hurt my expectations that the USD is setting up for a strong run over the next several months).So, in summary, my pivot in GLD is now125.70.As long as we remain over that level, we can still subdivide for a full 5waves higher. However, should we break below it, then I will be watching for that whipsaw scenario, as long as we remain over121GLD. Below 121GLD, and I think we are likely headed to new lower lows.

If you know the other and know yourself, you need not fear the result of a hundred battles.

Sun Tzu

We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.